Ensure your child’s future wellness through education with the help of Old Mutual.
As a parent, your child’s wellness is undoubtedly your main priority – even if they haven’t arrived yet or have just made their entrance into the world. This, of course, includes doing everything in your power to ensure a better and brighter future for them.
One of the most important building blocks for creating that future is providing the best possible education for your child. With the cost of education rising every year, it’s crucial to start thinking about saving for their education as soon as possible.
The rising cost of education
‘Parents need to understand the rate at which educational costs are increasing. Where normal inflation sits at around 5% per year, educational inflation in South Africa is currently around 7%,’ says Marius Pretorius, Head of Marketing: Retail Savings and Income at Old Mutual*.
‘To put this into perspective,’ she adds, ‘if your little one starts Grade R in 2024, you’re likely to spend around R1.4 million [for them] to complete public schooling and a standard four-year bachelor’s degree. And if you’re considering private schooling, get ready to fork over a staggering R2.6 million.’
If you plan to have children in future, or if your children haven’t yet reached school-going age, be aware that these costs will keep increasing. That’s why it’s essential to start thinking about education costs now.
Breaking down the added expenses
When budgeting for your child’s education, you need to consider costs beyond tuition fees. Additional expenses such as textbooks, uniforms, sports gear, transport, extracurricular activities and boarding fees must form part of your budget. Most schools also require students to have tablets or laptops, which can be pricey and need replacing every few years.
‘The educational landscape is changing, and this might also impact how you budget for your child’s tuition,’ adds Pretorius. ‘For instance, taking a gap year after matric has become common – that means starting tertiary education a year later, which adds an extra year’s inflation onto the potential cost. You might want to put something extra aside to help your child start their own business after graduation. The education framework is no longer just a set path – it can be approached in many ways, each with its own opportunities and cost implications.’
The true value of education
The statistics speak for themselves – the higher your child’s education level, the better their chances in the job market. Likewise, it’s a proven reality that higher education levels directly correlate with higher salaries and job satisfaction.
Consider this:
- 63.5% of matriculants get employed**.
- 87.5% of graduates get employed**.
A good plan begins with good advice
Every parent faces unique circumstances, so getting help from a financial adviser can make all the difference.
A skilled financial adviser can help you calculate how much you need to save, depending on when you start, and they can also help you work out how to free up money in your budget and still manage your current financial obligations. They could also assist you in maximising your tax efficiency and adjusting your approach to finances to accommodate life changes, in addition to providing the peace of mind that comes with having a professional guiding you through the complexities of education planning and helping you make informed financial decisions.
Old Mutual has also created several free tools and calculators to help parents get started at www.oldmutualeducationtools.co.za
It’s never too early to start saving for your child’s education. The longer you give yourself, the more likely you are to keep up with the perpetual rise in educational costs. Give your little one a big advantage by speaking to an accredited financial adviser today. Visit oldmutualeducationtools.co.za or call 0860 66 66 59.
* Old Mutual Data: Investment strategies are taken at their target midpoint. CPI (Consumer Price Index) or inflation is set at 5% per year. Education inflation has been set at 7%. Although tuition fees were sourced during research, these figures can vary from year to year. Exchange rates at the time of going to print are assumed as follows: 1 USD is R18.50, and 1 GBP is 23 ZAR
**Statistics SA – Business Tech Article, December 2021.
Old Mutual Life Assurance Company (SA) Limited is a licensed FSP and Life Insurer.
